Handbook 104.3
AIMS/Processing Handbook
Chapter 30
Statutes
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Contents
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- This chapter provides general information, guidelines and
instructions for identifying and controlling statute cases. This
text will be incorporated into IRM 121.2, Statute Limitations at a
later date.
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- The statute of limitations for tax matters is the limited period
of time in which the Service has the right of enforcement of the law
(Internal Revenue Code) in the examination and collection processes.
This period of limitations varies according to the type of tax and
the imposed criminal and civil penalties (see IRM 104.3.30-1).
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- Statute awareness is vital to an employee's performance in
identifying statute cases. Statute awareness helps to minimize
barred assessments and erroneous abatements. For additional
information concerning the Assessment Statute Expiration Date (ASED),
Collection Statute Expiration Date (CSED), or the Refund Statute
Expiration Date (RSED), see IRM 121.2, Statute Limitations.
- Employees who deal with statute related issues must be able to
identify imminent or expired statutes for assessing, refunding and
collecting tax on different types of accounts, such as IMF, BMF, and
IRAF.
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- Course No. 2477 should be provided to all new employees. This will
provide them with a basic understanding of the importance of statute
control. It will also provide them with the knowledge and skills to
process case files prior to the expiration of the statute of
limitations. Periodically, this material should also be provided to
all employees as a refresher course or to be used as a desk guide.
- Document 7368, Basic Guide for Processing Statute Cases, is also
available to all employees. The document can be ordered from the
distribution center under catalog number 1096C.
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- Each manager is responsible for ensuring that every employee in
his/her unit is able to recognize and identify a tax return's
statute expiration date and is aware of the statute control
procedures as outlined in this chapter. Each employee should be made
aware that failure to protect a statute may result in disciplinary
action against the responsible employee.
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- First line managers of employees working statute cases should
conduct periodic reviews of cases assigned to the employees. The
purpose of the review process is to ensure that employees are
properly processing cases in a timely manner. Additional training,
research guidance or counseling may be warranted if deficiencies are
noted.
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- See IRM 104.3.30-1 for the ASED by type of return.
- There is no ASED until the taxpayer files a return (i.e.
Substitute for Return (SFR) cases). TC 599 with Closing Codes 39,
64, and 89, indicate the taxpayer has either signed an agreement to
the proposed assessment or a return was completed and returned with
the Taxpayer Delinquency Inquiry. The statute period begins on the
date the agreement or return was received when CC 39, 64 and 89 are
present with TC 599.
- If an account contains an SFR TC 150 and a TC 971 Action Code 13,
this indicates that examination received a delinquent return from
the taxpayer after an SFR was processed. The ASED period will begin
on the return received date that is input with the TC 971.
- Effective January 1994, unless a TC 599, 976 or 977 has already
posted, Master File will compute the ASED on an SFR return module in
the order listed below.
- The ASED that is input with the TC 300
- The 23C date if no ASED is input with the TC 300
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- The ASED of a carryback of a loss or credit, or recoupment of a
previously allowed carryback, is governed by the ASED of the year in
which the loss or credit originated, for the portion of the
adjustment attributable to the carryback.
- General adjustment deficiencies are not assessable using the
ASED of the loss year.
- There is a potential for barred deficiency interest when a
general adjustment deficiency is offset by an NOL carryback.
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- The ASED can be updated on AIMS using Command Code AMSTU. See the
Updating/Correcting AIMS Data Base Chapter in this Handbook.
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- General Rule: A claim for refund must be filed within 3 years
from the date the original return was filed or
2 years from the date the tax was paid, whichever is later (IRC
Section 6511). If no return was filed, the claim may
be allowed if filed two years from the date of payment. Exception:
An original delinquent return with prepaid credits is considered a
timely claim if received (IRS Received Date) within 3 years form the
due date, including any extensions of time for filing (IRC Section
6511 (b) (2) (a)).
- Example 1: The taxpayer provides a 1992 return to the examiner
or agrees to an examination report for the 1992 year on 1/19/95.
The withholding is considered paid on 4/15/93. The taxpayer may
receive a refund of any excess withholding since the claim was
filed before 4/15/96.
- Example 2: The taxpayer provides a 1991 return claiming
withholding to the examiner on 8/1/95. The withholding is
considered paid on 4/15/92. The taxpayer may not receive a
refund of any excess withholding since the claim was not
received by 4/15/95. Also, excess payments cannot be applied to
any other year.
- Refunds of taxes paid after the return due date may be made if
taxes were paid within the period that is three years, plus any
extension, preceding the filing of the delinquent return/claim.
Example: A payment that is made on May 15, 1992, for the 1991 tax
year claimed on a Form 1040 for tax year 1991 that is filed on
August 1, 1995 with no extensions can only be applied against the
1991 tax liability. The excess tax payment cannot be refunded.
- When a taxpayer files a claim for refund more than three years
after filing a delinquent return, the taxpayer may recover as a
refund or credit to other years only the amounts paid within the two
years immediately preceding the filing of the claim for refund. All
other amounts can only be applied against the liability for the year
of the delinquent return.
- Example: If a taxpayer filed a 1988 return on October 1, 1992
and paid part of the balance due with the return and paid the
remaining amount on October 20, 1995, the period of limitations
for filing a claim for refund for the final payment would expire
October 20, 1998.
- No offset of credits to another tax period or refund will be
allowed after the expiration of the period of limitation for refund.
The examining officer will notate on the Form 3198, "IRC 6511
limitations for expired prepayment credits." Any credit balance
must be transferred to the Excess Collection File (XSF)
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- The taxpayer is entitled to a refund of credits paid within the
normal three year statute of limitations cases with one exception:
- If the taxpayer petitions the Tax Court AND files the
delinquent return after the issuance of the 90-DAY LETTER, the
taxpayer is only entitled to a refund of credits paid within two
years from the date of the 90-DAY LETTER.
- The filing date of their return makes no difference on
non-petitioned cases, regardless of the 90-DAY LETTER issuance date;
the normal three year period applies to refunds.
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- The 90-Day Letter is issued to taxpayer A on Example 1 August 5,
1994, his 1991 tax liability. The taxpayer defaults and an
assessment is made. The taxpayer files a delinquent return on April
5, 1995, showing a refund due. The case is sent to Examination for
reconsideration, and is accepted as filed. Credits shown on the
return are from estimated tax payments and withholding, deemed paid
on April 15, 1992. Since the tax was paid within three years of the
date the return was filed (including extensions), the claim is
considered timely, and a refund may be issued.
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- Same facts as Example 1, except the taxpayer petitioned Tax Court
after the issuance of the 90-Day Letter. Since no return had been
filed as of the date of the mailing of the 90-DAY LETTER, taxpayer A
is only entitled to recover amounts paid within two years prior to
the mailing of the 90-DAY LETTER. Consequently, the taxpayer would
not be entitled to a refund.
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- The CSED is normally ten years from the date of assessment.
- If no return for a tax period is filed (i.e. 6020(b) cases, the
CSED cannot be computed and will not expire. See IRM 121.1,
Interest, for procedures covering the situation requiring extension
of the CSED due to the assessment of interest.
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- The ASED is extended or suspended by several conditions (see IRM
104.3.30-3). The most common, are listed below:
- Bankruptcy
- Issuance of a Notice of Deficiency (90 day letter) or Notice
of Final Partnership/S Corporation Administrative Adjustment (FPAA/FSAA)
for Tax Equity and Fiscal Responsibility Act (TEFRA) cases;
- Cases involving a carryback of a loss or credit;
- A consent form with the return that extends the period of
limitations for assessment;
- Overassessment due to a timely filed claim;
- Filing of a Tax Court petition.
- Appeals is responsible for updating AIMS or entering the amended
statute expiration date in Item 14 on Form 5403, Appeals Closing
Record. See Appeals Closings Chapter of this handbook for additional
information.
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- Consent forms may extend the ASED to a specific date or
indefinitely. Several consent forms have a related termination form
which revokes the extension. The following are consent and
termination forms used to extend the statute expiration date.
- Form 872, Consent to Extend the Time to Assess Tax
- Form 872-A, Special Consent to Extend the Time to Assess Tax
- Form 872-B, Consent to Extend the Time to Assess Miscellaneous
Excise Taxes
- Form 872-N, Notice of Termination of Special Consent to extend
the time to Assess Tax Attributable to Items of Partnership
- Form 872-O, Special Consent to Extend the Time to Assess Tax
Attributable to Items of a Partnership
- Form 872-P, Consent to Extend the Time to Assess Tax
Attributable to Items of a Partnership
- Form 872-Q, Notice of Termination of Special Consent to Extend
the Time to Assess Tax Attributable to Items of an S Corporation
- Form 872-R, Special Consent to Extend the Time to Assess Tax
Attributable to Items of an S Corporation
- Form 872-S, Consent to Extend the Time to Assess Tax
Attributable to Items of an S Corporation
- Form 872-T, Notice of Termination of Special Consent to Extend
the Time to Assess Tax; and k. Form 911, Application for
Taxpayer Assistance Order (ATAO) to Relieve Hardship
- Form SS-10, Consent to Extend the Time to Assess Employment
Taxes
- In order for the above consent forms to be valid, they must be
signed by the taxpayer(s) and accepted (signed on behalf of the
Service by an authorized IRS manager) before the statutory period
expires. Each period agreed upon may be extended by a subsequent
agreement, in writing, before the expiration of the previous period.
If the statute date has been extended, the original consent form
will be attached to the return when received in the processing
function.
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- A Form 872 or 872-A may be restricted as to the nature of consent.
The statute is extended only on the portion of tax attributable to
the issue addressed in the consent as follows:
- The restricted consent must contain the statement "The
amount of any deficiency assessment is to be limited to that
resulting from any adjustment to (description of the area(s) of
consideration) including any consequential changes to other
items based on such adjustment". Restricted consents
prepared by Appeals will contain similar language.
- If a restricted consent is received with a return with other
adjustments, use the normal ASED for assessment purposes or the
responsible manager or statute coordinator may handcarry to the
Examination Quality Measurement Staff or Service Center
Examination Classificatiion Section for a determination.
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- Form 872-A extends the period of limitations to a date not more
than 90 days after either of the following:
- the Service mails Form 872-T to the taxpayer;
- the Service receives Form 872-T from the taxpayer.
- The extension created by Form 872-A is superseded by the issuance
of a Notice of Deficiency or Notice of Final Partnership/S
Corporation Administrative Adjustment. See IRM 4.3 for additional
information.
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- The affect of Form 872-O, Special Consent to to Extend the Time to
Assess Tax Attributable to Items of a Partnership, is to hold the
period of limitations open, with respect to any person and which is
attributable to any partnership item for a partnership taxable year,
for the time required for Service consideration of the case plus 90
days for closing action. Form 872-O applies only to partnership
taxable years beginning after September 3, 1982, and to partnership
taxable years ending after September 3, 1982. If the Tax Matters
Partner (TMP) or any other person authorized by the partnership in
writing to sign consents prefers, Form 872-P, Consent to Extend the
Time to Assess Tax Attributable to Items of a Partnership, will be
accepted in place of Form 872-O.
- Generally, Form 872-O extends the period of limitations to a date
90 days after one of the following:
- the Service mails a written notification to the TMP of
termination of the Service's consideration of the case, or mails
a Notice of Final Partnership Administrative Adjustment (FPAA)
to the TMP for the taxable period involved. If a FPAA is mailed,
the time for assessing the tax for the taxable period stated in
the FPAA will end one year after the period during which the
making of an assessment was prohibited (150 days plus one year);
or
- the Service office considering the case receives a written
notice from the TMP electing to terminate Form 872-O. A properly
executed Form 872-N, Notice of Termination of Special Consent to
Extend the Time to Assess Tax Attributable to Items of a
Partnership, constitutes written notification of termination of
Form 872-O by the partnership or the Service. With the exception
of mailing a FPAA, written notification of termination of Form
872-O by the TMP or the Service may only be effected by Form
872-N.
- Form 872-N will be prepared and issued for all "no
change" years closed. Copies of executed Forms 872-N mailed to
the TMP should be attached to the partnership return to which it
applies. Form 872-N received from the TMP should be attached to the
latest partnership return to which it applies with copies attached
to earlier years. If a Form 872-N, executed by the District
Director, is in the case file, ESP will mail it to the Tax Matters
Person (TMP) upon closing the case.
- Fully agreed partnership years resulting in an increase or
decrease in partnership items do not require Form 872-N. In such
cases, the period of limitation for assessment of tax
attributable to partnership items will generally terminate
immediately after assessment of an increase in tax.
- If the partner has signed a Form 872 or 872-A with respect to
issues unrelated to the terminated Form 872-O (i.e.,
nonpartnership items), that Form 872 or 872-A remains in full
force and effect. (The provision on Form 872-O concerning the
early termination of the period of limitations for assessment
applies equally to an overassessment for a taxable year if such
overassessment reflects the final determination of tax and final
administrative Appeals Consideration) . In these situations, a
statute extended to date of 120 days from the date the case is
expected to close through the terminal will be used.
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- The affect of Form 872-R, is to hold the period of limitations
open, with respect to any person and which is attributable to any S
corporation item for an S corporation taxable year, for the time
required for Service consideration of the case plus 90 days for
closing action. Form 872-R applies only to S corporation taxable
years beginning after December 31, 1982. If the Tax Matters Person (TMP)
or any other person authorized by the S corporation in writing to
sign consents prefers, Form 872-S, Consent to Extend the Time to
Assess Tax Attributable to Items of an S Corporation, will be
accepted in place of Form 872-R. Form 872-R may be used as a renewal
consent if Form 872-S had previously been secured.
- Generally, Form 872-R extends the period of limitations to a date
90 days after one of the following:
- the Service mails a written notification to the TMP of
termination of Service consideration of the case, or mails a
Notice of Final S Corporation Administrative Adjustment (FSAA)
to the TMP for the taxable period involved, except that if a
FSAA is mailed, the time for assessing the tax for the taxable
period stated in the FSAA will end one year after the period
during which the making of an assessment was prohibited (150
days plus one year); or
- the Service Office considering the case receives a written
notice from the TMP electing to terminate Form 872-R. A properly
executed Form 872-Q, Notice of Termination of Special Consent to
Extend the Time to Assess Tax Attributable to items of an S
Corporation, constitutes written notification of termination of
Form 872-R by the S corporation or the Service. With the
exception of mailing a FSAA, written notification of termination
of Form 872-R by the TMP or the Service may only be effected by
Form 872-Q.
- Form 872--Q will be prepared and issued for all "no
change" years closed. Copies of executed Forms 872-Q mailed to
the TMP should be attached to the S corporation return to which it
applies. Form 872-Q received from the TMP should be attached to the
latest S corporation return to which it applies with copies attached
to earlier years. If a Form 872-Q executed by the District Director
is in the case file, ESP will mail it to the Tax Matters Person (TMP)
upon closing the case.
- Fully agreed S corporation years resulting in an increase or
decrease in S corporation items in which Form 872-R was secured do
not require Form 872-Q. In such cases, the period of limitations for
assessment of tax attributable to S corporation items will generally
terminate, with respect to any shareholder, immediately after
assessment against such shareholder of an increase in tax. If the
shareholder has signed a Form 872 or 872-A with respect to issues
unrelated to the terminated Form 872-R (i.e., non-S corporation
items), that Form 872 or 872-A remains in full force and effect.
(The provision on Form 872-R concerning the early termination of the
period of limitations for assessment applies equally to an
overassessment for taxable year if such overassessment reflects the
final determination of tax and the final administrative Appeals
consideration) . In these situations, a statute extended to date of
120 days from the date the case is expected to close through the
terminal will be used.
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- Form 872-T is prepared for all "no change" taxable years
closed regardless of the Form 872-A revision date. If a Form 872-T
is in the case file, Examination Processing will mail it to the
taxpayer upon closing the case.
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- The minimum ASED on a bankruptcy case is 60 days after the
bankruptcy stay on assessment is lifted plus the number of days left
on the normal statute before the stay went into effect. IRC 6213(f),
6503(a) (1), and 6503(i) all provide a 60-day "tack-on" to
the period of limitations. One interpretation of these Code
provisions would allow for suspension of the limitations period for
assessment of taxes subject to the deficiency procedures up to 270
days by reason of the bankruptcy case. This involves tacking on the
three additional 60-day periods in IRC 6213(f), 6503(a) (1), and
6503(i) to the unexpired portion of the 90-day period during which
the taxpayers can petition the Tax Court. However, reliance upon
this interpretation should only be made where the assessment
limitations period would have otherwise expired. In such case,
counsel should be consulted. Ordinarily, in making assessment
computations, it should be assumed for precautionary measures that
the 60-day period in 6503(i) runs concurrently with and should not
be tacked onto the other two 60-day periods. Examination Quality
Measurement personnel should indicate this date on the case file.
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- The 90-day letter, suspends the ASED from the date of the letter
up to 90 days (150 days for a foreign address) awaiting the
taxpayer's response, plus an additional 60 days as mandated by IRC
6503. Exhibit 104.3.2-1 has examples of how to compute the new
statute date if a statutory notice of deficiency is issued.
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- A timely filed claim for refund or credit extends the statute date
for the length of time it takes the Service to act on it.
- A claim for a refund or credit must be filed by the normal
statute expiration date (RSED) or within two years after the tax
is paid to be considered timely.
- A timely filed agreement or waiver is considered a valid claim
for refund when the taxpayer agrees to an overassessment
determined by the Service.
- Assessment of tax shown on amended income tax returns can be made
within 60 days from the date of receipt of the documentation that
the taxpayer owes additional income tax, even if the normal statute
expires during the 60 day period (IRC 6603, subsection (c)).
- The statutory period for assessment of a deficiency attributable
to contributions to the capital of a corporation in aid of
construction will not expire before the expiration of 3 years from
the date the Secretary is notified by the taxpayer of:
- the amount of expenditure;
- taxpayer's intention not to make expenditure;
- failure to make expenditure as required.
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- A Form 911 can be filed by or on behalf of a taxpayer who feels
that he/she will suffer a significant hardship due to the way the
Internal Revenue laws are administered. IRM 1.27.9, Problem
Resolution Program Handbook Chapter (10)00, outlines the criteria
for use of this form. The statute of limitations is suspended from
the date of the PRO's receipt of the signed Form 911 to the date of
the final decision on what action is warranted. Affected cases will
be identified on Form 3198, Special Handling Notice.
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- If there are any questions concerning the statute of expiration
date that cannot be immediately resolved, a technical advisor in the
originating function or Quality Measurement Staff for assistance.
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- If an adjustment is not made to a tax account by the assessment
statute expiration date (ASED), it is barred and cannot be made. See
IRM 4.2 for further information on the use and preparation of the
Reports on Statute Expiration Cases, samples of the reports, and
submission of the reports.
- If a case is forwarded to the processing function with a barred
statute, the preliminary Form 3999 will be prepared and given
immediately to the unit manager for return to the responsible
function. Final Form 3999, Statute Expiration Report, will be
prepared for any situation where ESP had responsibility for the
protection of the statute (i.e. possession of a return) and it was
allowed to expire thus preventing any assessment or refund of tax.
- If a case which appears to be a barred assessment is found within
the Examination processing function, it must be reviewed thoroughly
to ensure there are no factors present to extend the statute, e.g.
Tax Court decision, NOL carryback, Personal Holding Company,
substantial omission of income, "tack on" time not
considered. If processing can find no reason for extension, the case
may be discussed with the District Quality Measurement Staff/Service
Center Quality Assurance Staff, Service Center Classification
Section or other appropriate technical personnel.
- When a potentially expired statute is discovered, a preliminary
Statute Expiration Report, Form 3999, must be prepared within 10
days of discovery by the person who discovered it. This should not
be construed, or in any way imply, that the preparer of the report
is the person responsible for the expired statute. A final Statute
Expiration Report, Form 3999, is prepared either at the initial
discovery date (if all necessary information on the expired statute
is available) or at a later date (within 60 days) after research is
conducted to gather necessary information to determine the cause of
the expired statute. Included in the narrative should be comments as
to whether Table 4.0 has been properly worked. If a return was not
on AIMS, comments to that effect should be included along with the
reasons the case was not properly controlled.
- If the final report is prepared by Service Center Examination
processing, in addition to providing copy to the Assistant Regional
Commissioner (Examination), a copy should be sent to the Assistant
Regional Commissioner (Returns Processing) . If the final report is
prepared by Appeals, a copy should be forwarded to the ARC
(Examination) through normal channels. These reports may be prepared
using Form 3999.
- A taxpayer notification letter must be prepared by the responsible
employee or his/her manager in accordance with IRM 4.03.26. Standard
paragraphs to be used for this notification are in IRM 104.3.30-2.
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- If no payment was received, make no assessment and process Form
5344 with Disposal Code 12, enter TC 300 zero and $1 in Item 35
after Form 3999 is signed by Director or Designee.
- If the taxpayer makes a voluntary payment after the ASED expired,
process case as discussed above.
- If an advanced payment is processed before the ASED expired;
- Process Form 5344 as discussed above but enter a Hold Code 4
in Item 7.
- Prepare Form 8758 to move payment to the Excess Collections
File.
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- Pattern Letter P-429 will be prepared if a voluntary payment is
received after the ASED. (See lRM 104.3.30-2 and the Closing Chapter
for more information.).
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- The above procedures should be followed when closing Appeals cases
with barred statutes. Form 5403, Appeals Closing Record, should be
used where Form 5344, Examination Closing Record, is referenced.
- Returns received from Appeals should be reviewed/validated for
statute expiration. In some instances, the statute examiner and
his/her manager will be unable to determine the proper statute
expiration date due to the complexity of the case. In these
instances, coordinate with Appeals and/or Quality Measurement Staff
to ensure protection of the statute.
- In the event a barred statute is discovered prior to date stamping
the transmittal document from Appeals, it should be immediately
returned to Appeals for completion of the Statute Expiration Report.
If the barred statute is discovered after receipt, the preliminary
Form 3999 should be prepared. If it is determined that ESP was
responsible, the final 3999 should also be prepared. If it is
determined that Appeals was responsible, Appeals should prepare the
final statute expiration report.
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- Following are procedures for statute control in ESP.
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- Immediately upon receipt, all returns will be screened to identify
prior year returns for which for ESP the statute of limitation will
expire within 120 days or less. All returns with a tax period ending
2 and 1/2 years prior to the date received in ESP should be examined
for statute expiration date. This will include civil penalty cases.
Civil penalty cases with statutes that expire within 120 days will
be controlled.
- In most instances, returns with 210 days left before statute
expiration will have been identified for statute control by the
Examination function transmitting the case. These returns will have
a Form 895, Notice of Statute Expiration, attached or entered in an
automated Statute Control System and should be enclosed in a red
folder. However, only a return with 120 days or less remaining
before the statutory period expires must be placed under the ESP
statute control system.
- If Form 895 is attached, validate the statute of limitations
date entered in Item 2 or 11 on Form 895 or entered on the
automated control system.
- A separate Form 895 should be present for each tax year under
examination.
- Monthly and Quarterly returns pertaining to the same tax year
may be included on a single Form 895.
- If statutes are controlled by an automated system, items (a)
thru (c) apply to that system.
- Keep in mind that some cases may not be identified by a Form 895,
or on a Statute Control System, or a red folder (e.g. amended or
delinquent returns). For these cases, a Form 895 must be prepared
and attached to the front of the case file.
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- In order to maximize the effectiveness of the statute procedures
and decrease resources for its maintenance, there will be a central
location established for the statute control file. When the 90-day
function is located outside of the processing function, a separate
statute control file may be maintained for the 90 day case file at
the option of local management. Care must be exercised (when local
management has opted for two separate statute control systems) that
cases in the 90 day area remain under statute control. The Chief,
ESP Branch/Section will designate a manager to have primary
responsibility for maintenance of the statute control file and Table
4.0, Returns with Statute Date Pending. Actual maintenance of the
file may be assigned to clerical personnel. This procedure does not
relieve other managers and employees of their responsibilities to
protect the statute expiration of returns within their respective
areas.
- Generally, all returns with 120 days or less remaining before the
statutory period expires will be placed under the ESP statute
control system.
- A tax examiner will be responsible for examining all cases for
statute expiration upon receipt in ESP. Form 895 or Statute Control
System will be prepared or validated to ensure that proper control
is established. All statutes, including Appeals cases, must be
reviewed/validated. If the statute examiner is unable to arrive at
the ASED shown on the incoming return, including those on Form 5403,
the file should be brought to the attention of management for
verification.
- Non-examined returns, with the exception of surveyed claims
(Disposal Code 34) and transfers (Disposal Code 30), will not
require statute control.
- Statute cases meeting the 120-day criteria must be controlled
while located in ESP, regardless of the length of time.
- The statute control file will consist of any record keeping
procedure which will enable the responsible employee to control,
monitor and close the file in ESP.
- Manual control systems will generally use one part of Form 895
as the control card.
- Automated control systems may vary because of equipment
requirements; however, all requirements of the manual control
system must be met.
- Form 895 must contain enough information to clearly identify and
locate the case, ana to make a protective manual assessment if
necessary. The tax examiner will add and/or correct the following
information on Form 895 or Statute Control System.
- Complete name
- SSN/EIN
- Statute of limitation date
- Return form number
- Taxable year or period;
- Amount of tax deficiency and penalty, if any.
- A separate Form 895 or an entry on the Statute Control System will
be prepared for each tax year. Monthly/quarterly returns pertaining
to the same year may be included on a single Form 895 or noted in
the same entry on the Statute Control System.
- Forms 895 for returns with 210 days or less remaining before
statute expiration should have been completed by the group prior to
forwarding for closing. If Form 895 is required but not attached,
the unit manager should be notified and proper feedback provided to
the originating function/group.
- All cases under statute control must receive a ESP received date
stamp and be clearly annotated "Statute Control", followed
by the tax examiner's name. Forms 895 will be reviewed or prepared,
or an entry clarify statement made to the Statute Control System.
|
|
|
- The statute control file will consist of one part of Form 895 (or
locally developed substitute) and any other documentation determined
to be necessary by local management or an automated system that
meets the requirements of the manual control system. The file will
be divided into two parts, open cases and closed cases.
- Forms 895 and entries on the Statute Control System on open cases,
including 90 day inventory, will be maintained alphabetically (or
SSN/EIN order for service centers) by statute expiration (Item 2 or
11 on Form 895) or on the automated control system. A second control
file may be maintained in the 90 day suspense area.
- Returns with Form 872-A attached will be carefully examined by the
statute control clerk to ensure that the 872-A is correctly prepared
and signed by both the taxpayer and the IRS. Unrestricted Form 872-A
cases will be statute controlled at the option of local management.
Returns with Restricted Forms 872-A must be controlled if they are
within 120 days of the statute date on any unprotected proposed
assessments. Form 895 will be prepared and placed in the front of
the open section of the Form 895 file. See lRM 4.3 for additional
information.
- The statute expiration date will be changed only upon receipt of a
properly executed extension, termination of extension, an agreement
form or a signed examination report, or if the 90-day case defaults.
- If a consent is received to extend the statute, Form 895 will be
pulled and the new statute expiration date will be entered in Item
11 or a new statute date will be entered on the automated control
system.
- Write the consent form number, date received and the name of
the tax examiner in Item 12 or enter it on the Automated Control
System. If possible, attach a copy of the consent form when
using a manual system.
- The consent form will be forwarded for association with the
case and Form 895 attached to the case will be updated
accordingly. Both the supervisor and the employee who have
possession of the case will place their initials next to the
revised statute date.
- The control copy of Form 895 will be filed under the revised
statute expiration date.
- Form 5348, Examination Update, must be prepared to update the
AIMS data base with the revised statute date.
- The open section of the file will be monitored weekly. Each week
(preferably on Monday) Forms 895 for returns with less than 30 days
remaining on the statute will be photocopied or a list from the
statute control system will be generated and given to the Chief,
ESP, unit managers and the tax examiner or special search clerk. The
returns must be located and immediate action taken to protect the
statute. If the statute has been extended due to the issuance of a
90-day letter, or otherwise protected, the report should be notated
and returned to the statute control clerk.
- If the return cannot be located after special search, a quick
assessment will be made from the information on the Form 895
control card or Statute Control System.
- An AIMS freeze code should be input to prevent case closure.
This will allow a tax examiner to abate any duplicate
assessment.
- Any pertinent development and/or action regarding the statute
return will be brought to the attention of the employee maintaining
the statute file. This notification of information will be initiated
by the employee having possession of the return. Units returning a
case to the customer function, e.g., 90 day letter or a mandatory
review case, will notify the statute control examiner of the change
in location.
- When initiating a pertinent action, ensure that the AIMS status
code is updated.
- When verification of assessment has been received (AIMS St. 90/PN
TC 300; Form 3552), Form 895, along with any documentation or the
entry on the Statute Control System will be moved to the closed
section of the file. The closed section of the file will be
maintained alphabetically (or SSN/EIN order for service centers) by
month closed and will be purged and destroyed in accordance with lRM
1.15.5.9.22, Records Control Schedule 202 for Examination-Regional
and District Offices, and IRM 1.15.5.9.26, Records Control Schedule
206 for Service Centers.
|
|
|
- The terminals will not accept a deficiency case for closing if the
ASED has expired or will expire within 60 days, unless;
- the fraud indicator is entered in Item 38 on Form 5344.
- case if closed to Appeals
- or the ASED entered in Item 14 on Form 5344 is greater than 60
days from input date.
|
|
Exhibit [104.3] 30-1 (02/08/99)
Expiration of Statutes (ASED) by Types of Tax
| (Reference: 104.3.30.2) |
Type
of Tax |
Due Date of Return |
Statute Expires |
| Income |
|
|
| 1040 |
15th day of 4th month following end of taxable year |
3 years from due date or filed date whichever is later |
| 1040-A |
Same as 1040 |
Same as 1040 |
| 1040EZ |
Same as 1040 |
Same as 1040 |
1041,
1041-A,
1041-B |
Same as 1040 |
Same as 1040 |
| 1065 |
15th day of 4th month following end of taxable year |
Information Return-Tax effect is on partner's return |
| 1120 |
15th day of 3rd month following end of taxable year |
3 years from due date or date filed whichever is later |
1120
DISC |
15th day of 9th month following end of taxable year |
3 years from the due date of a corporate return which is not a
DISC (i.e., a regular 1120) or 3 years from the date the return
was filed, whichever is later. |
| 1120-S |
Same as 1120 |
Same as 1120 |
| Estate |
|
|
| 706 |
9 months from date of death. |
3 years from due date or date filed whichever is later |
| Gift |
|
|
| 709 |
Form 709, United States Gift Tax Return filed for gifts made
after December 31, 1981, must be filed on or before the 15th day
of April following the close of such calendar year when the
annual gifts exceed $10,000 for one donee |
3 years from due date or date filed whichever is later |
| Excise |
|
|
| 720 |
End of month following close of quarter |
3 years from due date or date filed whichever is later |
| 2290 |
Taxable period always ends June 30 for trucks in use in July,
the return is due in August of that calendar year. For
additional vehichles placed in use after July, an additional
return is due the end of the month following the month of first
use of the vehicle. |
3 years from due date or date filed whichever is later |
| Employment |
|
|
| 940 |
January 31 following end of calendar year. |
3 years from due date or date filed whichever is later |
| 941 |
End of month following close of of quarter |
3 years from 15th day of 4th month of following year. If any
return is filed after the 15th day of the 4th month of the
following year, statute expires 3 years from date filed. |
| 942 |
Same as 941 |
Same as 941. |
| 943 |
January 31 following end of calendar year |
3 years from following April 15th or 3 years from date filed
whichever is later. |
| 945 |
January 31 following end of calendar year |
3 years from following April 15th or 3 years from date filed
whichever is later. |
| Special Rules |
|
| Employee's Share of FICA when these taxes should
have been withheld by employers, but were not |
The statute of limitations begins at the same point as for the
their employers Form 941, even if the specific employee was not
listed there. |
| Net Operating Loss and Investment Credit Carry
Back |
The expiration is determined by the loss year or the year in
which the unused credit originates-See IRC 6511 and 6501. |
| Substitute For Return (SFR) |
The preparation and execution of an SFR does not start the
running of the ASED. Filing of a tax return by the taxpayer is
required, unless the TP petitions a statutory notice with tax
court (IRC (IRC 6212 (c)). |
| Transferee Liability |
Income, Estate & Gift Taxes-See IRC 6901 (a) (1)
Excise & Employment Taxes-See IRC 6901 (a) (2) |
|
|
Exhibit [104.3] 30-2 (02/08/99)
Pattern Letters P-427, P-428 and P-429
| (Reference (IRM 104.3.30.10) |
|
|
Pattern Letter P-427 (Rev. 7-73) |
| (Use Appropriate Salutation): |
|
| We have discontinued action concerning
the deficiency disclosed by our examination of your 19- Federal
income tax return, because the statutory period in which we
could legally have assessed the deficiency has expired. |
| The enclosed examination report for
that year shows the tax we believe would have been due had the
statute not expired. The report is for your information. You
have no legal obligation to pay the deficiency shown in it. |
|
Sincerely yours,
(Signature)
(Title) |
| Enclosure: Examination Report |
|
|
Pattern Letter P-428 (Rev. 7-73) |
| (Use Appropriate Salutation): |
|
| We have discontinued our examination
of your 19- Federal income tax return, because the statutory
period in which we could legally have scheduled any refund or
assessed any deficiency has expired. |
|
Sincerely yours,
(Signature) (Title) |
|
Pattern Letter P-429 (Rev. 7-73) |
| (Use Appropriate Salutation): |
|
| We have received your check dated
(Date), for $(Amount), which we will apply as payment against
the deficiency disclosed by our examination of your 19- Federal
income tax return. |
| Thank you for your cooperation. |
|
|
Sincerely yours,
(Signature)
(Title) |
|
|
Exhibit [104.3] 30-3 (02/08/99)
Conditions Which Extend the Assessment Statute Expiration Date
| (Reference: IRM 104.3.30.8) |
| Note: An additional assessment (TC 290/TC 300) does not extend
the ASED. The ASED is determined only by the received date or
due date of the original return-unless any of these conditions
are met. |
| 25% Omission--IRC 6501(e) |
| Bankruptcy |
| Combat Zone Personnel--IRC 7508 |
| Designated Summons--IRC 6503(k) |
| Excise Tax--IRC 6501(b) (4) |
| Exempt Organizations--IRC 6501(g) (2) |
| Extension of Time to File |
| Failure to Pay Penalty Assessment |
| Fiduciaries, Transferees & Transferrers--IRC 6901 |
| Foreign Tax Carryback--IRC 6501(i) |
| Form 911, Application for Taxpayer Assistance Order (ATAO) to
Relieve Hardship--IRM 1279 |
| Form 2290, Heavy Vehicle Use Tax Return (Not always) |
| Fraud-IRC 6653 Gift Tax--(Form 709) |
| Investment Credit Carryback--IRC 6501(h) |
| Involuntary Conversion--IRC 1033 |
| Joint Return After Separate Returns--IRC 6013 |
| Mitigation (Inconsistent Position)--IRC 1314(b) |
| Net Operating Loss (NOL) or Capital Loss--IRC 6501(h) |
| Notice of Deficiency (90-Day Letter) --IRC 6503 |
| Notice of Final Partnership/S Corporation Administrative
Adjustment (FPAA/FSAA) on TEFRA cases. |
| Offers in Compromise--IRC 6502 (a) |
| Overassessment due to timely filed claim |
| Partnership Items |
| Personal Holding Company--IRC 543(a) & 544 |
| Request for Prompt Assessment--IRC 6501(d) |
| Tax Court Petition |
| Sale of Principal Residence--IRC 1034(j) |
| Special Tax Stamp--each location established ASED (Form II) |
| Split-Interest Charitable Trusts |
| Subtitle D Taxes |
| Substitute for Return (SFR)--IRC 6501(b) (3) |
|
|
Internal Revenue Manual
|
Hndbk. 104.3 Chap. 30 Statutes
|
(02-08-1999)
|
|
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Refunds - Two Year Rule 
A few closely related topics & pages:
http://www.irs.gov/prod/bus_info/tax_pro/irm-part/part04/30370.html
You have not engaged Bob Parrish CPA PC, Bob Parrish CPA, pro1040,
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of this site. ....... Thursday, February 22, 2007 11:44 AM
Objective one
What it does:
This is about Activity Based Taxplanning - maximizing deductions,
minimizing cash outlay and maximizing the amount of cash retained and the net worth.
Activity Based Taxplanning (ABT) is a methodology developed by Bob Parrish CPA,
that assists people with the tax issues by focusing on the activity (or actions
- events) that are being undertaken or contemplated (or have already taken
place). The, research is compiled from the myriad of sources to help
you complete the activity with the least tax cost, while maintaining compliance
the tax laws, other laws and regulations and place yourself in a position to
protect your objectives.
This is about Activity Based Costing - methods to cut costs,
management accounting, management information systems, decision support systems - in
general about being a manager.
Entrance Interview
Assistance
- What to do
Spreadsheet #1
Agreement #1
Report #1
Checklist #1
Financial
Statement Presentation
Compliance Checklist
Alerts
& Dangers - Risks
